Chapin v. Jenkins

CourtUnited States State Supreme Court of Kansas
Citation31 P. 1084,50 Kan. 385
PartiesE. J. CHAPIN v. ELIZABETH JENKINS et al
Decision Date07 January 1893

Error from Bourbon District Court.

ELIZABETH JENKINS brought this action to recover the possession of a stock of merchandise, together with some fixtures and tools against Wm. F. Dinklage, and A. D. Jones, the assignee of Dinklage. She claimed the right of possession under a chattel mortgage executed by Dinklage on March 2, 1889, but which was not recorded until August 5, 1889, the day on which Dinklage made an assignment. Jones was appointed by Dinklage as temporary assignee, and afterward the creditors met and elected E. J. Chapin as the permanent assignee, who thereafter filed an answer, alleging that the mortgage of Jenkins was void. On January 28, 1890, the cause was tried before the court without a jury, and, after the evidence was introduced, the court made the following findings of fact and conclusions of law:

"FINDINGS OF FACT.

"1. On March 2, 1889, defendant Dinklage, being in the confectionery and bakery and light grocery business, borrowed $ 400 of plaintiff, and gave his note, secured by chattel mortgage on stock and fixtures mentioned in petition. The mortgage contained the usual stipulation for possession in mortgagor, and usual stipulation as to plaintiff's right to possession, and also a stipulation by which Dinklage was to sell in due course of trade, but to replace all goods sold, and the mortgage to cover all goods so replaced. A copy of the same is correctly set forth in the petition. This transaction was in good faith, but by oversight and carelessness the plaintiff failed to record said mortgage said assignment being made in good faith and Dinklage being insolvent. Dinklage held possession, bought and sold, but paid nothing on plaintiff's debt.

"2. August 5, 1889, Dinklage made a general assignment to Jones of the property covered by the mortgage, for the benefit of his (Dinklage's) creditors. Jones, being a nominal partner of Jenkins, and having requested the loan to Dinklage, and having full knowledge concerning the same, went to plaintiff's house and procured the mortgage, and filed it for record about 30 minutes before filing the deed of assignment.

"3. On the next day plaintiff's husband and agent, who had acted for her in making the loan, came home and learned of the assignment. He saw Jones and complained about the transaction, and found fault with Jones for the part he had taken, and Jones replied that plaintiff would not lose anything, to which plaintiff's husband replied that he wanted the goods, and on the same day began this suit, the store being locked up and the key in Jones's possession.

"4. A large portion of the claims proved up under the assignment and all the debts mentioned in the schedule of liabilities 'Exhibit E,' except $ 110, were made between March 2 and August 5. At least a part of these creditors had no notice of the mortgage until after the assignment.

"5. The plaintiff, having replevied said property, proceeded to advertise and sell the same at public sale to J. C. Bennett for $ 475, said sale being advertised by notices posted up and by notice in the Evening Tribune, a fair number of persons and bidders attending the sale. The attorneys of the defendants warned all persons at the sale not to bid. The value of the property so sold was $ 1,500.

"6. Jones and Dinklage were made defendants in this suit, and E. J. Chapin was appointed assignee by the court to succeed Jones, and, on his own motion, was substituted defendant in Jones's place.

"7. The affidavit in replevin alleges ownership, and describes the property in bulk substantially as in the mortgage.

"8. The petition in replevin alleges special ownership under the chattel mortgage, and sets forth a true copy thereof. Defendant Dinklage files a general denial, and asks return of the value of the property. Defendant Chapin files a general denial, and alleges that the mortgage was informal and void, and not recorded as the law requires, and asks a return of the property or its value.

"9. No other or formal demand was made than as above set forth, and the plaintiff conceded on the trial that no demand was made.

"10. The advertisement and public sale were made and conducted in good faith.

"11. The scheduled debts of the assignor at the time of assignment were $ 1,637.56, and the assignor owed more debts than were embraced in the schedule."

"CONCLUSIONS OF LAW.

"1. The defendant Dinklage, having executed the note and mortgage in good faith, for value, cannot be heard to complain, and has no defense to this suit.

"2. Defendant Jones, being his assignee under the statute for the benefit of creditors, took no better title or greater rights than Dinklage had, and cannot question a former conveyance or transfer by his assignor.

"3. The defendant Chapin, being substituted for defendant Jones, occupies the same position that Jones would have occupied, and with the same rights and restrictions. Owing to the fact that defendant Chapin claims through said assignment, he cannot be permitted to show fraud in the mortgage or take advantage of the failure of the plaintiff to record the same forthwith.

"4. The mortgage being good as between plaintiff and defendant Dinklage, it is good between plaintiff and defendant's assignee.

"5. Plaintiff, by virtue of a chattel mortgage, and by virtue of the statute, had the legal title to this property at the commencement of this suit, and was therefore owner thereof, within the meaning of the statute concerning affidavits in replevin, and by the assignment and transfer of possession the conditions of the mortgage had been broken.

"6. At the commencement of this suit, if the defendant Jones held possession of the property recognizing plaintiff's rights and willing to yield possession on demand, then plaintiff's duty was to make demand, but, under the pleadings in this case, defendant Jones, now Chapin, claiming title under the deed of assignment, and denying plaintiff's title or right to possession, the existence or proof of demand is rendered unnecessary.

7. Plaintiff is entitled to recover in this action."

Judgment was given in accordance with the conclusions of law. The plaintiff in error, E. J. Chapin, excepted, and brings the case here for review.

C. E. Cory, and E. W. Hulbert, for plaintiff in error:

1. A demand is a prerequisite in replevin where the defendant originally acquired possession rightfully. Arthur v. Wallace, 8 Kan. 273; Wilson v. Fuller, 9 id. 176; Brown v. Holmes, 13 id. 482-491; Stone v. Bird, 16 id. 488-493; Shoemaker v. Simpson, 16 id. 43-53; Dickson v. Randal, 19 id. 212-215; Hall v. Draper, 20 id. 137-141; Seip v. Tilghman, 23 id. 289-291; Raper v. Harrison, 37 id. 243; Schmidt v. Bender, 39 id. 437-441; Moser v. Jenkins, 5 Ore. 447; Surles v. Sweeney, 11 id. 21; Campbell v. Quackenbush, 33 Mich. 288; Hill v. Covell, 1 N.Y. 522; Kelsey v. Griswold, 6 Barb. 436.

2. The Jenkins chattel mortgage was void because it was not recorded forthwith; it resulted in defrauding Dinklage's creditors, and it sought to hold after-acquired goods. Twyne's Case, 3 Coke, 80; Frankhouser v. Ellett, 22 Kan. 127-141; Cameron v. Marvin, 26 id. 612; Leser v. Glaser, 32 id. 546.

3. The holder of a mortgage which is in fraud of creditors cannot be allowed to enforce it against the statutory assignee of the mortgagor. Sandwich Mfg. Co. v. Wright, 22 F. 631; Setter v. Alvey, 15 Kan. 157; Bernstein v. Smith, 10 id. 60; Gerlach v. Skinner, 34 id. 86; Flersheim v. Cary, 39 id. 178; Feineman v. Sachs, 33 id. 621; Stewart v. Platt, 101 U.S. 731; Rumsey v. Town, 20 F. 555; Clapp v. Nordmeyer, 25 id. 71.

A. A. Harris, and John H. Crain, for defendant in error Jenkins:

As to the first proposition relied upon by counsel for plaintiff in error to sustain their contention in this case:

This proposition is always governed by the circumstances surrounding the case to be decided. Cobbey on Replevin, § 447, says. "The decisions upon the question when a demand is necessary are neither uniform nor entirely reconcilable; but I think the better doctrine is, that a demand is only required when it is necessary to terminate the defendant's right of possession or to confer that right upon the plaintiff." See, also, Lamping v. Kemon, 9 Colo. 390; Eldred v. Oconto Co., 33 Wis. 140; Homan v. Laboo, 1 Neb. 204; Myrick v. Bell, 17 N.W. 268; Smith & Co. v. McLean, 24 Iowa 322; Dickson v. Randal, 19 Kan. 212; Raper v. Harrison, 37 id. 243; Redding v. Page, 52 Iowa 406; 5 Am. & Eng. Encyc. of Law, 528i, and note 3 thereto.

As to the second proposition relied upon by plaintiff in error, we submit that it cuts no figure in this case, for the following reasons:

1st. Because the mortgage, under our statutes, whether recorded or not, was good inter partes, and "the assignee takes only such rights in the property as the assignor had at' the time of the assignment." 1 Am. & Eng. Encyc. of Law, 854; Shaw v. Glenn, 37 N.J.Eq. 32; Henrichs v. Woods, 7 Mo.App. 236; Brown v. Brabb, 11 Am. Rep. 549; Platt v. Preston, 3 F. 394.

2d. There is no question of defrauding creditors before this court; there is no evidence to that effect and no finding of fact warranting that conclusion. In fact, the assignee cannot be heard to complain of the acts and doings of the assignor before making the assignment. Under the statutes of certain states, notably New York, fraudulent transfers may be resisted, but even then the fraud must be fraud in fact. Rev. Stat. N.Y. (7th ed.) 2330.

3d. If the above reasoning is logical and good law, then the third proposition of plaintiff in error necessarily falls to the ground. Crawford's Adm'r v. Lehr, 20 Kan. 509, 512.

JOHNSTON J. All the Justices concurring.

OPINION

JOHNSTON...

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